- Company Announces First Half Cash Dividend
of $0.10 Per Share -
Please replace the release dated November 17, 2022 with the
following corrected version due to revisions to the first, third,
and fourth paragraphs to update mentions of fiscal 2022 to fiscal
2023.
The updated release reads:
DESWELL ANNOUNCES FIRST HALF 2023
RESULTS
- Company Announces First Half Cash Dividend
of $0.10 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the first six months of fiscal
2023, ended September 30, 2022.
Net sales for the six months ended September 30, 2022 were $44.4
million, an increase of 11.7% compared to net sales of $39.8
million for the six months ended September 30, 2021. Net sales
increased by 20.9% to $36.1 million in the electronic segment but
decreased by 15.9% to $8.3 million in the Company’s plastic
segment.
Total gross margin slightly decreased to 16.0% of net sales
during the six months ended September 30, 2022, as compared to
16.1% of net sales in the same period last year. Gross profit
margin in the plastic segment increased to 13.2% of net sales for
the first half of fiscal 2023, compared to 10.7% of net sales for
the corresponding period of last fiscal year. The increase in gross
profit and margin in the plastic segment was mainly due to
decreases in raw materials cost, and in basic pay rate of labor
costs due to lower headcount in the first six months of fiscal
2023. Gross profit margin in the electronic segment decreased to
16.7% of net sales for the first half of fiscal 2023, compared to
17.9% of net sales for the corresponding period of last fiscal
year. The decrease in gross margin in the electronic segment was
mainly attributable to increases in raw materials cost for
semiconductor chips as a result of the continuing shortage in
supply and pricing volatility for the first six months of fiscal
2023. Operating income in the first half of fiscal 2023 was $2.0
million, compared to operating income of $1.2 million for the same
period of fiscal 2022.
The Company reported net loss of $0.6 million for the six months
ended September 30, 2022, compared to net income of $4.3 million
for the six months ended September 30, 2021. This was primarily due
to a non-operating expense of $2.3 million for the six months ended
September 30, 2022, as compared to a non-operating income of $3.3
million for the same period of fiscal 2022. Deswell reported basic
and diluted loss per share of $0.04 for the first half of fiscal
2023 (based on 15,935,000 and 15,935,000 weighted average shares
outstanding), as compared to basic and diluted income per share of
$0.27 for the first half of fiscal 2022 (based on 15,923,000 and
16,041,000 weighted average shares outstanding), for the six months
ended September 30, 2021.
The Company's financial position remained strong, with $15.6
million in cash and cash equivalents and working capital totaling
$59.4 million as of September 30, 2022. Furthermore, the Company
has no long-term or short-term borrowings as of September 30,
2022.
Mr. Edward So, Chief Executive Officer, commented, “We’re
pleased to have delivered solid revenue and operating income growth
in the first half of fiscal 2023, driven by our electronics segment
where we saw continued demand for home audio and entertainment
equipment and for professional audio instruments and equipment. Our
sales growth in this segment reflects our ability to reliably
produce and deliver products on-time, creating value for our
customers. This growth was partially offset by decreased sales at
our plastics segment.”
“During the first half of fiscal 2023 the global economic and
political environment were unsettled, impacting worldwide financial
markets and, as a result, we recorded an unrealized loss of $4.4
million on our investment portfolio. Nonetheless, we achieved
improved operating income of $2.0 million as compared to $1.2
million in the same prior year period. Our balance sheet remains
strong with a solid cash position and no debt providing us the
financial flexibility to deliver strong operating performance while
implementing our long-term growth strategy to capitalize on market
demand for our manufacturing capabilities.”
First Half Dividend
The Company also announced that its board of directors today
declared a cash dividend of $0.10 per share for the first half of
the fiscal year ended September 30, 2022. The dividend will be
payable on December 22, 2022 to shareholders of record as of
December 1, 2022.
About Deswell
Deswell manufactures injection-molded plastic parts and
components, electronic products and subassemblies, and metallic
molds and accessory parts for original equipment manufacturers
(“OEMs”) and contract manufacturers at its factories in the
People’s Republic of China. The Company produces a wide variety of
plastic parts and components used in the manufacture of consumer
and industrial products; printed circuit board assemblies using
surface mount (“SMT”) and finished products such as telephones,
telephone answering machines, sophisticated studio-quality audio
equipment and computer peripherals.
To learn more about Deswell Industries, Inc., please visit the
Company’s website at www.deswell.com.
Forward-Looking Statements
Statements in this press release that are "forward-looking
statements" are based on current expectations and assumptions that
are subject to risks and uncertainties. For example, our statements
regarding our expected growth in sales from the electronic division
in the coming year and our efforts to reduce overhead costs in our
plastic division are forward-looking statements. Actual results
could differ materially because of the following factors, among
others, which may cause revenues and income to fall short of
anticipated levels or our overhead expenses to increase: our
dependence on a few major customers; vigorous competition forcing
product price reductions or discounts; the timing and amount of
significant orders from our relatively few significant customers;
continuing increases in resin prices that cannot be passed on to
customers; unexpected production delays; obsolete inventory or
product returns; losses resulting from fraudulent activity of our
customers or employees; labor shortages that increase labor and
costs; changes in the mix of product products we manufacture and
sell; adverse currency fluctuations in the renminbi and Hong Kong
dollar when translated to US dollars; potential new accounting
pronouncements; and the effects of travel restrictions and
quarantines associated with major health problems, such as the
Severe Acute Respiratory Syndrome, on general economic
activity.
For further information regarding risks and uncertainties
associated with the Company’s business, please refer to the “Risk
Factors” section of Company’s Annual Report on Form 20-F, copies of
which may be obtained from the Website maintained by the Securities
and Exchange Commission at http://www.sec.gov.
All information in this release is made as of the date of this
press release. Deswell undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or changes in Deswell’s expectations.
DESWELL INDUSTRIES, INC. CONSOLIDATED
BALANCE SHEET (U.S. dollars in thousands)
September 30,
March 31,
2022
2022
ASSETS
(Unaudited)
(Audited)
Current assets :
Cash and cash equivalents
$
15,577
$
13,465
Fixed deposits maturing over three months
3,966
4,354
Time deposits maturing over twelve months - current portion
-
1,564
Marketable securities (note 3)
19,461
24,499
Accounts receivable, net
22,077
18,195
Inventories (note 2)
20,696
23,819
Prepaid expenses and other current assets
2,032
1,926
Total current assets
83,809
87,822
Property, plant and equipment - net
26,447
27,017
Deferred income tax assets
231
259
Time deposits maturing over twelve
months
3,070
313
Total assets
$
113,557
$
115,411
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
$
10,133
$
9,838
Accrued payroll and employee benefits
7,776
7,611
Customer deposits
2,646
2,343
Other accrued liabilities
2,560
2,950
Income taxes payable
1,292
1,232
Total current liabilities
24,407
23,974
Deferred income tax liabilities
526
659
Total liabilities
24,933
24,633
Shareholders' equity
Common shares nil par value; authorized 30,000,000 shares;
17,081,810 shares issued; 15,935,239 shares outstanding as of March
31, 2022 and September 30, 2022
53,202
53,202
Treasury stock at cost; 1,146,571 shares as of March 31, 2022 and
September 30, 2022
(2,821
)
(2,821
)
Additional paid-in capital
7,973
7,973
Accumulated other comprehensive income
5,316
5,316
Retained earnings
24,954
27,108
Total shareholders' equity
88,624
90,778
Total liabilities and shareholders' equity
$
113,557
$
115,411
DESWELL INDUSTRIES, INC. CONSOLIDATED
STATEMENT OF OPERATIONS & COMPREHENSIVE INCOME
(UNAUDITED) (U.S. dollars in thousands, except per share
data)
Six months ended
September 30,
2022
2021
Net sales
$
44,438
$
39,782
Cost of sales
37,324
33,362
Gross profit
7,114
6,420
Selling, general and administrative
expenses
5,751
5,348
Other income, net
677
111
Operating income
2,040
1,183
Non-operating (expense) income, net
(2,310
)
3,288
(Loss) income before income taxes
(270
)
4,471
Income taxes
290
173
Net (loss) income attributable to Deswell
Industries, Inc.
$
(560
)
$
4,298
Other comprehensive income
$
-
$
-
Comprehensive (loss) income attributable
to Deswell Industries, Inc.
Net (loss) income per share attributable
to Deswell Industries, Inc. (note 4)
Basic:
Net (loss) income per share
$
(0.035
)
$
0.27
Weighted average common shares outstanding shares (in thousands)
15,935
15,923
Diluted:
Net (loss) income per share
$
(0.035
)
$
0.27
Weighted average number of shares outstanding (in thousands)
15,935
16,041
DESWELL INDUSTRIES, INC. CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED) (U.S. dollars in
thousands)
( U.S. dollars in thousands )
Six months ended
Six months ended
September 30,
September 30,
2022
2021
Cash flows from operating activities :
Net (loss) income
$
(560
)
$
4,298
Adjustments to reconcile net (loss) income to net cash provided by
operating activities : Depreciation and amortization
858
883
Reversal of provision for doubtful accounts
(46
)
(163
)
Reversal of obsolence allowance of inventories, net
(125
)
(293
)
Gain on disposal of property, plant and equipment
(22
)
-
Unrealized holding loss (gain) on marketable securities
4,354
(845
)
Realized gain on disposal of marketable securities
(120
)
(653
)
Exchange loss from marketable securities
-
117
Deferred tax credit
(105
)
(34
)
Changes in operating assets and liabilities : Accounts receivable
(3,836
)
(2,631
)
Inventories
3,248
(4,506
)
Prepaid expenses and other current assets
(106
)
(931
)
Accounts payable
295
2,635
Accrued payroll and employee benefits
165
523
Customer deposits
303
1,473
Other accrued liabilities
(390
)
393
Income taxes payable
60
177
Net cash provided by operating
activities
3,973
443
Cash flows from investing activities
Purchase of property, plant and equipment
(318
)
(822
)
Proceeds from disposal of property, plant and equipment,
52
16
Purchase of marketable securities
(1,123
)
(7,301
)
Proceeds from disposal of marketable securities
1,927
6,739
Release of (increase in) fixed deposits maturing over three months
388
(370
)
Increase in fixed deposits maturing over twelve months
(1,193
)
-
Net cash used in investing activities
(267
)
(1,738
)
Cash flows from financing activities
Dividends paid
(1,594
)
(1,592
)
Exercise of stock options
43
Net cash used in financing activities
(1,594
)
(1,549
)
Cash effect of exchange rate changes
Net increase (decease) in cash and cash
equivalents
2,112
(2,844
)
Cash and cash equivalents, at beginning of
period
13,465
20,223
Cash and cash equivalents, at end of
period
15,577
17,379
Supplementary disclosures of cashflow
information:
Cash paid during the period for: Interest
-
-
Income taxes
231
89
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version on businesswire.com: https://www.businesswire.com/news/home/20221117005691/en/
Investor Relations: John Nesbett/Jennifer Belodeau IMS
Investor Relations 203.972.9200
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